November/December $2.50 2008 ARIZONA THOROUGHBRED 2011 STALLION REGISTRY New ad from Hidden Springs 2 Arizona Thoroughbred October/November/December October/November/December 2010 • Issue IV © 2009 by The Arizona Thoroughbred Breeders Association Incorporated New Tax Court Case Stresses Recordkeeping 4 - 6 P.O. Box 41774, Phoenix, Arizona 85080 Telephone: (602) 942-1310 • Fax: (602) 942-8225 ATBA offices are located at 1501 West Bell Road, Phoenix, Arizona, 85023. Don & Vera Smith 50th Anniversary 7 The Arizona Thoroughbred is published bi-monthly (annually publishes a Stallion Registry) in Phoenix, Arizona by the Arizona Thoroughbred Breeders Association, a non-profit corporation, dedicated to the ATBA Fall Sale Stake - R El Jefe 8 production of better Arizona-Bred Thoroughbred horses for better Arizona Thoroughbred racing. Opinions expressed in signed articles are those of the authors and do not necessarily reflect policies of the ATBA Fall Sale Stake - Lonesome Creek 10 ATBA or this magazine. Publication of any material originating herein is expressly forbidden without first obtaining written permission from The Arizona Thoroughbred. ATBA Sale Results 11 -14 All advertising copy is submitted and subject to approval. We reserve the right to reject any copy that is misleading or that does not meet with the standards set by this publication. Zia Park Premier Handicap - Ez Dreamer 15 Advertising rates supplied upon request. Track Talk 16 OFFICERS - Prairie Meadows Freshman Stake - Uh Oh Bango 18 President: Michael Lester Vice-President: Gene Fleming Treasurer/Secretary: Peggy Hopwood Arizona-bred Winners 19 - 22 Arizona Impact on Breeders Day 22 DIRECTORS - Dr. Ronald Allen, Dale Billings, Ron Chappell, Frank Covello, Gene Fleming, Dennis Grenier, Peggy Hopwood, Paul Lang, Michael Lester, Rancho Bernardo Handicap - Carlsbad 23 Wende Macumber, Jeff Miller, Dale V. Ray, Lyman Rollins, Lee Vaughn, and R. C. “Rink” Williams. ATBA Sale Winners 24 - 28 Hugh Southern (Honorary) . Stallion Award Nomination 30 - 31 ATBA ADMINISTRATIVE STAFF - Executive Director: Yvonne Kunz Arizona-Bred Registry: Berdette Felipe Arizona Stallion Standings 32 - 33 Associate Editor: Yvonne Kunz Advertising: A.T.B.A. Office Calendar 34 Advertising Index 34 CONTRIBUTORS - 2010 Stallion Registry BLOODSTOCK RESEARCH 35 COADY PHOTOGRAPHY JOHN ALAN COHAN On the Cover FOUR FOOTED FOTO THE JOCKEY CLUB PAULA WELCH PRATHER SUBSCRIPTIONS - $15.00 annually domestic; $24.00 foreign October/November/December Arizona Thoroughbred 3 New Tax Court Case Stresses Higher Standars of Recordkeeping By John Alan Cohan, Attorney at Law In a lengthy decision, the Tax Court recently property and the taxpayers retained decision making underscored the difficulties taxpayers have in authority. convincing the IRS that family-run farms are engaged in for profit. The case, Smith V. Commissioner, T. C. Through study, the taxpayer gained expertise in the Memo 2007-368, ruled on two families limited breeding of cows and in the use of Normande cows partnerships, involving a cow and dairy farm, a for dairy purposes. They graze the cattle rather than cutting horse operation, and dog breeding. The court confining them because they believe that grazing held that the cow and dairy farm was engaged in for positively affects the longevity of the cattle. They profit under the IRS Hobby loss rules, but not the sought professional advise and successfully used other activities. their previous dog-breeding expertise in the farm venture. They spent an average of 20 to 30 hours The taxpayers had taken significant tax deduction per week on the cow and dairy farm activity, and the against their income from the activities, thus court said this was “significant”. prompting an IRS audit, which they lost and they appealed to the Tax Court. As discussed in the The horse activity, however, was another matter, decision, the taxpayer believed that family dairy and the court ruled that this was not conducted farms were not doing well, so they sought a niche for profit. The taxpayers showed and bred cutting in the market in order to compete as to product horses. There was no business plan and very little by and price, and decided to raise Normande cattle. A way of books on the activity other than Schedules F milking parlor with automatic milking equipment on their tax returns. Oral testimony about the horse and other improvements were made, pasture land activity was “lacking in specific.” The taxpayer who reclaimed, the miles of fencing installed. testified “discussed horse bloodlines, but failed to indicate much about his horses, such as the year and The Taxpayers had a formal 7-year business plan cost of purchase, the training regimen, the event written by a professional that focused on importing entered, purses and competitions won, breeding of bull semen to France. After getting started they efforts, profits analyses, business plans, necessity of sought and obtained certification as an organic farm expenses, sale price, and so forth.” with a view towards selling milk at higher prices than conventional milk. They consulted with experts, The bank account used for the horse activity was maintained a separate checking account and focused the taxpayer’s personal checking account. There was on ways to maximize revenue. Gross revenues no evidence to show the horse purchased or their exceeded $100,000 for some years, but there was still progress and profitability. There were no budgets, net loss. The taxpayer said they expected to increase operating statements, or analysis to show the revenue due to the organic certification. financial aspect of the activity. They took steps to maximize revenues that the court The court noted that the taxpayer consulted with said demonstrated their intention to show a profit. numerous experts, but didn’t have details of the (despite on going losses). They hired a full-time specific advice he obtained. There was no explanation farm manager who the court noted “did approach of “how the advice he obtained was used or how the operation of the cow activity in a businesslike it assisted in the attempt to seek profits from the manner, “although he did not keep many formal activity.” The court said that this factor was in favor records. The manager lived in a trailer on the (continued on page six) 4 Arizona Thoroughbred November/December THE ARIZONA THOROUGHBRED BREEDERS ASSOCIATION 2011 YAVAPAI COUNTY ARIZONA BREEDERS FUTURITY $20,000 ADDED Foals of 2009 Race to be run at Yavapai Downs at Prescott Valley, Arizona TRIALS June 11, 2011 - FUTURITY June 26, 2011 • 5 FURLONGS FUTURITY FOR ARIZONA-BRED TWO-YEAR-OLDS. Starters shall not exceed ten. All horse must enter and race in the trials (if needed) to be eligible to race in the Futurity. Sufficient trials (if needed) will be run to accommodate all entrants with no more than ten horses. The ten qualifiers and two preferred horses will be posted by the racing secretary the following morning. The purse will be divided 50% to winner; 20% to second; 12% to third; 8% to fourth; 4% to fifth; 2% to sixth, 1% to each of the next four finishers. All entrants to the trials must pay $200 to enter. All entrants must pass the entry box for the trials and finals at the usual time of closing for that racing day. Weights for the Futurity trials and finals; Fillies 117 lbs., Colts/Geldings 120 lbs. All races will be restricted to 2009 Arizona-bred foals, registered and certified by the Arizona Thoroughbred Breeders Association. Nominations are transferable if ownership changes, however, it is the responsibility of the new owner(s) to notify the A.T.B.A. and make all sustaining payments to participate in the race. The A.T.B.A. will deduct ten percent of all nominating and sustaining payments for clerical fees before each race. Eligibility of horses nominated to the Yavapai County, Arizona Breeders Futurity are subject to compliance with Arizona Rules of Racing under the supervision of the Arizona Department of Racing; Arizona Racing Commission; the Racing Secretary at Yavapai Downs and the Arizona Thoroughbred Breeders Association. The A.T.B.A. reserves the right to cancel or postpone these races or trials for these races for any reason which is deemed good and sufficient. In the event of cancellation, all sustaining payments already made will be refunded to appropriate parties less the administrative fees stated herein. $25.00 NOMINATION PAYMENT DUE DECEMBER 15, 2010 Sustaining Payment Schedule FEBRUARY 1, 2011 $100.00 APRIL 15, 2011 $150.00 TO ENTER Trials/Race $200.00 NO SUPPLEMENTARY NOMINATIONS detach and return form I have read the conditions of the 2011 Yavapai County Arizona Breeders Futurity and agree to be governed by them. Enclosed is $_____________for _______nominations. All nominations must be postmarked or in the ATBA office by due date, December 15, 2010. Horses name Year Sex Dam 1. ________________________________________2009_______________________________________________________ 2.________________________________________ 2009_______________________________________________________ 3. ________________________________________2009_______________________________________________________ 4. ________________________________________2009_______________________________________________________ 5. ________________________________________2009_______________________________________________________ Name______________________________________________________________Phone_____________________________ Address______________________________________________________________________________________________